Update on the Presidential Proclamation that Implements The U.S.-Australia FTA

Most of the substance of Proclamation 7857 is included in its Annexes (I, II, and III); however, certain provisions regarding textiles and apparel are in the proclamation's text.

Highlights of both the annexes and the proclamation's text are provided below:

HTS Changes Effective January 1, 2005

Annex I. The following Annex I changes to the Harmonized Tariff Schedule (HTS) are effective with respect to goods entered, or withdrawn from warehouse, for consumption on or after January 1, 2005 (partial list):

Revised HTS General Note 3. General Note 3(c)(i) is modified to indicate that the HTS Column 1 "Special" subcolumn symbol for the UAFTA is "AU."

New HTS General Note 28. A new General Note 28 is added to the HTS that describes the eligibility requirements that goods of Australia must meet in order to benefit from the UAFTA.

Included in General Note 28 are explanations of the following terms for purposes of the note (partial list):

With respect to textiles and apparel, General Note 28 also has provisions on: (i) the 7% weight rule for goods that would otherwise be considered non-originating, ii) the rule for textile or apparel goods containing elastomeric yarns, iii) the rule for textile and apparel goods classifiable as goods put up in sets for retail sale, iv) a definition of "component of the good that determines the tariff classification of the good" for purposes of the above 7% and elastomeric yarn rules, iv) a definition of "textile or apparel good", and v) for purposes of certain textiles and apparel under the UAFTA tariff shift rules, a definition of good considered to be "wholly" of a material.

Also described in General Note 28 are the following:

de minimis

accumulation

regional value content

accessories, spare parts, or tools

fungible goods and materials

packaging materials and containers

indirect materials

record-keeping requirements and verification

interpretation of rules of origin

New General Note 28 "Tariff Shift" rules. General Note 28 also contains the HTS Chapter 1-97 UAFTA change in tariff-classification rules (used to determine whether a good is considered originating for purposes of receiving UAFTA preferential treatment, and sometimes subject to other rules).

New HTS Chapter 99, Subchapter XIII. A new Subchapter XIII, with 21 U.S. Notes, is added to HTS Chapter 99, which among other things, establishes tariff rate quotas (TRQs) for certain UAFTA originating agricultural goods (the in-quota duty rates for these TRQs are generally zero).

Unless otherwise provided, the provisions and notes of Subchapter XIII are effective for eligible goods entered through the close of December 31, 2022.

HTS Chapter 98, Subchapter XXII amended. In addition, HTS Chapter 98, Subchapter XXII is amended by adding a number of new notes and 8-digit headings.

Annex II. According to Annex II, the following changes are effective with respect to qualifying goods entered, or withdrawn from warehouse, for consumption on or after January 1, 2005 (partial list):

Immediate Zero Duty Rates. The HTS Chapter 1-98 tariff numbers that are duty-free immediately.

HTS Chapter 99 TRQs, etc. References to certain HTS Chapter 99 TRQ HTS numbers are added to various HTS Chapter 1-97 tariff numbers.

List of Staged UAFTA Duty Rates Reductions, Etc.

Annex II. In Annex II, the UAFTA staged duty rate reductions are listed (in table form) for each affected HTS Chapter 1-99 eight-digit tariff number. The staged duty rate reductions listed are for various periods from 2005 through 2022.

Annex III. According to Annex III, the following changes are effective with respect to (1) eligible goods exported from Canada or Mexico entered, or withdrawn from warehouse, for consumption on or after January 1, 1994; (2) eligible goods exported from Singapore or Chile entered, or withdrawn from warehouse, for consumption on or after January 1, 2004; and (3) eligible goods exported from Australia entered, or withdrawn from warehouse, for consumption on or after January 1, 2005, or other date the UAFTA enters into force:

The following new tariff numbers are added to HTS Chapter 98, Subchapter XXII (with associated new subdivisions added to U.S. Note 1):

In HTS Chapter 98, Subchapter XXII, HTS 9822.01.01 is redesignated as HTS 9822.01.25 (with a conforming change to U.S. Note 2)

Annex III also states that effective for goods entered, or withdrawn from warehouse, for consumption on or after the later of January 1, 2005, or the effective date of sections 1305 and 1306 of the Miscellaneous Trade and Technical Corrections Act of 2004, the article descriptions of HTS 9902.03.01 and 9902.03.02 are modified by deleting 5108.20.60 and inserting 5108.20.80 in lieu thereof.

Proclamation Text. The text of Proclamation 7857 also contains certain authorities specific to UAFTA textiles and apparel, as follows:

Authority to exclude textile and apparel goods, etc. Proclamation 7857 authorizes the Committee for the Implementation of Textile Agreements (CITA) to exercise the authority of the President under the textile and apparel enforcement provisions of the U.S.-Australia FTA Implementation Act to exclude textile and apparel goods from the customs territory of the U.S.; to determine whether an enterprise's production of, and capability to produce, goods are consistent with statements by the enterprise; to find that an enterprise has knowingly or willfully engaged in circumvention; and to deny preferential tariff treatment to textile and apparel goods.

Commencement of action for relief under textile and apparel safeguard. Proclamation 7857 also authorizes CITA to exercise the authority of the President under the textile and apparel safeguard provisions of the U.S.-Australia FTA Implementation Act to review requests, including allegations of critical circumstances, and to determine whether to commence consideration of such requests; to cause to be published in the Federal Register a notice of commencement of consideration of a request and notice seeking public comment: to determine whether imports of an Australian textile or apparel article are causing serious damage, or actual threat thereof, to a domestic industry producing an article that is like, or directly competitive with, the imported article; and to provide relief from imports of an article that is the subject of such determination; and if critical circumstances are alleged, to determine whether there is clear evidence that imports from Australia have increased as the result of the reduction or elimination of a customs duty under the UAFTA, whether there is clear evidence that such imports are causing serious damage, or actual threat thereof, to a domestic industry producing an article that is like, or directly competitive with, the imported article, and whether delay in taking action would cause damage to that industry that would be difficult to repair; and to provide provisional relief with respect to imports that are subject to an affirmative determination of critical circumstances that is necessary to remedy or prevent the serious damage.

U.S.-Australia FTA Proclamation 7857, without Annexes (FR Pub 12/23/04) available at http://a257.g.akamaitech.net/7/257/2422/06jun20041800/edocket.access.gpo.gov/2004/pdf/04-28242.pdf.

Annexes to Proclamation 7857, which are contained in ITC Publication 3722, available at http://www.usitc.gov/tata/hts/other/rel_doc/annex/pub3722.pdf.